Scenario 20-4
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/4 of income) - $14,000
-Refer to Scenario 20-4. This negative income tax ensures that families earn at least $56,000.

Question

Quizplus · Accepted Answer

The negative income tax ensures that families earn at least $56,000 only if the calculation is interpreted as providing a subsidy to those earning less than a certain threshold. However, the formula given does not directly ensure a minimum income level; it calculates tax liability or subsidy based on income. A family earning less than $56,000 would receive a subsidy (negative tax), but the formula itself does not guarantee a minimum income of $56,000 without additional context or mechanisms.

Scenario 20-4 Suppose the Government Implemented a Negative Income Tax and Used